Housing affordability in other global cities discussed at mayor’s roundtable

The mayors of Vancouver, Copenhagen, and deputy mayor of Helsinki tackled the affordability issue all three cities are facing at a roundtable this morning.

Copenhagen’s Frank Jensen says his city has some power over supply.

“We can demand that upward of 25% of new housing units shall be affordable housing.”

Gregor Robertson says his city faces an ever steepening curve putting home ownership out of reach for many.

“Our focus at the city level is to build rental housing. Over half of Vancouver residents rent their homes. Attacking the problem from all angles is all we can do at this point.”

Helsinki’s Pekka Sauri had a sobering assessment.

“I think the problem in the end is unresolvable. A successful city has a housing shortage. Demand is bigger than supply. The more you build housing the more people want to move in it is as simple as that.”

The provincial government has insisted more supply will bring prices down.

UBC economists cautions against subsidies for first time home buyers

Meanwhile, a UBC economist is warning that subsidizing first time home-buyers in Vancouver’s housing market will just heat it up even more.

Joshua Gottlieb says there are other options the city needs to consider as it tackles the affordable housing crisis.

Gottlieb is an assistant professor at the Vancouver School of Economics and says subsidies would only add fuel to demand which increases prices.

Instead, he’s calling for increasing property taxes on investment properties that are not being rented out …

“It increases the supply any of these fervent construction battles that tear apart neighbourhoods. It just increases supply by taking the existing houses and making it worth your while to rent them out uinstead of leaving them vacant.”

City council is expected to review several options on solving the lack of affordable housing in Vancouver over the next few months.

I think the mayor of Helsinki has correctly described the situation. Increasing the supply will help, but when you have a low cost currency, foreign buyers can buy at a discount. Governments believe they can provide “affordable” housing (whatever that means) but no viable system has been found that doesn’t involve unintended negative consequences.

People like Richard like to think that it is corrupt Chinese people who are driving the market. There is little data to support this, but I suppose venting makes him feel better. Government could place restrictions on foreign buyers, but to do so would involve a complex set of procedures and rules that would actually harm innocent people, Canadians just wanting to sell their homes. Government could try to control housing prices, but again this would have unintended consequences for many people. They would upset as many people as they would help. One person’s affordable house is someone else’s loss in value.

Elected officials would do well to state the obvious-there is little they can do and many people need to accept that they can’t live in Metro Vancouver any more. That will, in the long term, reduce demand (particularly when or if the loonie recovers) and reduce prices. Expecting the big nanny state to walk in and make sure everyone has an “affordable” house is just a fantasy.

John you really don’t think dirty China money has any bearing? Are you serious???? Wake up and smell the coffee. And more supply won’t help; there will be more demand for it as well and the prices will be pushed even higher as a result of the filthy money creating an uneven playing field.

Richard says there is tons of data but no “official stats”. He thinks “asking anyone in Vancouver” translates into data. I am sure there is “dirty money” from China and other places. But, do we assume all money from China is dirty and if not how do we distinguish between dirty and clean money.

The Vancouver housing market is so hot is because of 3 factors:
-the low Canadian dollar (which progressives told us would solve all of our problems) and
-instability and volatility in investment markets-negative interest rates, etc and the real estate is seen as a hedge.
-low interest rates which encourage speculation even in people not using dirty money. Borrow the money, pay the interest and hold for a year or two, make it all back and a nice profit as well.

There is no such thing as an “even playing field”. Some people have more money than others.

So, aside from xenophobic responses, what do Richard and Art propose? Nothing

Perhaps no one should be permitted to purchase residential real estate in Canada unless they can demonstrate that they are a resident of Canada for income tax purposes and has been so for at least three years. That might cool the industry off-but of course that would increase unemployment in the construction industry. Also, no guarantee against the “dirty money” issue. Can’t have everything.

The area of Richmond I live in is close to 80% asian. Most houses are in the $2 million or more range. Funny thing though, the average family income from official stats is $37,000. Not only are they driving the market but they pay little income tax. We, the ones that report all of our income, are picking up the slack. Allowing this to happen is short term gain for very long term pain.